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Obama Administration Targets Obstacles to American Telecommunications Trade in 2015 Report

New 2015 Telecommunications Report Highlights Key Changes in Cross-border Data Flows, Competition Issues, Legal Restrictions on Foreign Access, Local Content Requirements, and Other Roadblocks Faced by U.S. Telecommunications Exporters

Washington, D.C. Released today, the U.S. Trade Representative’s 2015 report on American telecommunications trade identifies the latest major barriers faced by United States telecommunications service and equipment suppliers in the global economy.  This report also illustrates the specific telecommunications-related issues on which USTR will allocate monitoring and enforcement efforts over the coming year so as to protect the high quality jobs supported by telecommunications trade.

Since last year’s Telecommunications Report was publicized, USTR has achieved progress on concerning issues that are impacting American exporters. For example, Pakistan had created a policy that increased the fees American telecommunications exporters had to pay for long-distance phone calls to over 400 percent of the market rate.  That policy is now being withdrawn.

Despite this progress, USTR is constantly watching for new challenges that face American telecommunications exporters, and several have emerged in the past year – particularly in China and Vietnam.

“The United States is a world leader in telecommunications services and innovation.  President Obama is strongly committed to standing up for the American jobs that are supported by telecommunications exports all over the world as the Administration seeks to increase Made-in-America exports,” said U.S. Trade Representative Michael Froman. “This report highlights important accomplishments the Administration won for American telecommunications exports.  At the same time, troubling new issues have come to light that need to be addressed, such as demands that American telecommunications companies reveal proprietary information to foreign governments.”

New and potential barriers to U.S. telecommunications trade covered in the 2015 report include the following:
 

  • China has proposed to require Information Communications Technology (ICT) suppliers serving financial institutions to, among other things, divulge the source codes of their products to the government and use indigenous technology.  China has also proposed onerous encryption approval and in-country data-storage requirements on ICT products.
     
  • Vietnam has established a minimum wholesale rate for international mobile roaming services, which increases the cost of U.S. operators providing data services in the market.  Vietnam has also proposed to regulate certain Over-the-Top services (i.e., Internet-based voice and text services supplied through mobile terrestrial telecommunications and fixed terrestrial telecommunications networks) by requiring their suppliers to sign commercial agreements with existing licensed telecommunications suppliers.

To view the full report, please click here.

Other issues in the 2015 Telecommunications Report focus on a broad range of concerns, including:  

  • Internet-enabled Trade in Services: Ongoing restrictions on cross-border movement of information in Russia, Nigeria, and Indonesia and voice-over the Internet (VoIP) services in China.
     
  • Independent and Effective Regulator: The lack of an independent and effective telecommunications regulator in China, which affects meaningful market access of U.S. service suppliers.
     
  • Foreign Investment: Foreign investment limits in China, typically in the form of limits on the percentage of equity a foreign firm can control, that distorts trade.
     
  • Competition: Anti-competitive policies that foreign telecommunications suppliers are encountering in Vietnam, the Dominican Republic, and China.
     
  • International Termination Rates: Policies and schemes that increase the rates U.S. telecommunications operators must pay in order to deliver long-distance calls into the foreign operators’ countries (the “termination rate”), resulting in higher costs for U.S. carriers and higher prices for U.S. consumers.  This year’s 1377 Review focuses on problems in Pakistan, Fiji, Tonga and Uganda and the European Union.
     
  • Satellite Services: The undue restrictions and opaque licensing requirements imposed on U.S. satellite service suppliers to reach customers in both China and India.
     
  • Telecommunications Equipment Trade: Ongoing localization concerns in Brazil and Indonesia and the use of equipment standards and conformity assessment procedures (including testing requirements) as barriers to entry for U.S. telecommunications equipment, including policies in the following countries:  China (Banking / ICT Measures), India (License Amendments) Brazil (Acceptance of Test Results), Indonesia (Domestic Manufacturing Requirements) and Nigeria (Local Content Requirements).

BACKGROUND

The Administration’s annual telecommunications report, sometimes referred to as the 1377 review, details the operation and effectiveness of telecommunications trade agreements under Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 and highlights both longstanding and emerging barriers to U.S. telecommunication services and equipment exports, which are a significant source of American jobs.

In the report, USTR reviews compliance by trade partners with trade agreements regarding telecommunications products and services (mainly, WTO and FTA commitments) by March 31 of each year.  International trade agreements, including the WTO’s General Agreement on Trade in Services (GATS) and U.S. free trade agreements, provide rules designed to ensure that companies have reasonable access to telecommunications networks, that competitive conditions are maintained, and that regulators act in a transparent and effective manner.  These agreements also address conditions affecting the competitive supply of telecommunications equipment in foreign markets.  USTR will continue to use these tools to assist in opening markets to give U.S. companies the ability to supply new and innovative products and services abroad.

USTR also identifies the most effective bilateral or multilateral fora to monitor, engage, and seek to resolve these issues, and describes the discussions that in many cases are already underway.